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Animal Spirits Podcast

Talk Your Book: The Companies Are Fine

Dec 11, 2023
Alex Morris, CIO and President of F/m Investments, discusses important topics including interest rate vs. credit risk in bond investing, market cap weighting bonds, and the resilience of credit markets. Podcast explores strategies for optimizing income and security in credit-based funds, as well as the potential drawbacks of cap-weighted index funds in the bond market.
31:15

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

  • Despite rising interest rates, companies are still able to pay debt on lower yields, preventing the bond market from blowing up.
  • Investors in the credit space must consider factors such as bond expiration dates, future cash flows, and companies' ability to refinance or repay debts rather than just focusing on headline yield numbers.

Deep dives

Credit space remains interesting with higher yields

The podcast discusses how interest rates have risen, but companies are still paying debt on lower yields. This has prevented the bond market from blowing up. Bonds, such as those issued by Microsoft, have become more attractive as their prices have decreased to match new interest rates. The credit space now offers higher yields of around 6-9%, making it more interesting than in previous years.

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